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The Entrepreneur: Innovate to Succeed

Successful companies, like winning sports teams, can't afford to sit on a big lead.
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Often when I read

, I see companies ousting CEOs and replacing them with new leaders promising to reduce costs, build efficiencies and increase sales. It's akin to new political leaders promising to reduce crime and taxes and raise our wages. Few deliver, and the cycle starts all over again.

Most companies, especially ones that have had a significantly successful product or service, share the same problem as sports teams with big leads: They try to play it conservatively. Bad move; better to stay on the offensive.

There have been many fat, dumb and happy leaders and boards that squandered tremendous advantages. The list of missed opportunities by highly successful companies is prodigious and worth mentioning as a reminder that you have to keep your eyes and mind open.

Here are some of the biggest lost opportunities of all time:

Telephone: Western Union was the creator of the wire service to send information all over the world. One day, Alexander Graham Bell came to them with an offer to sell his invention, the telephone. The Western Union board thought the price of $100,000 and the fact that no one had a device to use this new invention made the product too risky, and they closed the door in Bell's face.

Niche Television Markets: Wouldn't it have been a natural for major television networks to start all-sports, all-news and other niche networks? Now who is making all the money and who is fighting for survival?

Search Engines: Suppose you have a well-known, respected name like The New York Times, Washington Post or Chicago Tribune, and you have had more than a century's worth of experience selling information, job opportunities, cars and everything else you can think of. Why wouldn't you use your high-profile positions and start or Google?

Business Software: No company understood business better than IBM. Practically every Fortune 500 company and most small companies were using their technology to run their business. Wouldn't it have been natural to create software for small-business people to run their enterprises inexpensively?

Transportation: Imagine that you own the Pennsylvania Railroad, and one day you read about Wilbur and Orville Wright. Wouldn't it occur to you that you are in the transportation business and, with the right engineering, you could branch out to use the air to transport people and things?

In my 20-plus years of running businesses, every company that was successful was constantly innovating and reinventing itself. The companies that failed threw up walls and dug moats. Can anyone tell us a time in history where conquerors succeeded by locking themselves in their castles?

Here is the process I go through when trying to come up with new ideas:

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    Interview your clients to find out their needs.

    Look at what competitors are doing.

    Ask your employees and advisers for ideas.

    Look at industry and business magazines and Web sites for ideas.

    Look at similar industries.

    Develop a list of ideas.

    Pick the ideas that most appeal to you.

    Develop a short plan on how the new product or service will benefit your clients and your company and what the cost would be to develop, launch and maintain the concept.

    Run the plan by outsiders for their feedback and encourage them to challenge your assumptions.

    Give it a try.

    Developing new sources of revenue prevented me from being complacent and increased my competitive position. It has kept me interested and focused. Creating a culture of innovation is the only way your company can attract talent, create revenue and build barriers that exhaust the competition to the point that they prey on someone else.

    Kramer is the author of five business books on topics related to venture capital, management and consulting. He is a faculty member at the Wharton School of Business at the University of Pennsylvania and the veteran of over 20 start-ups and four turnarounds.